First time doing tax. I'm doing something wrong. REVISED

[Orsorum]

Originally posted by: alkemyst

Originally posted by: ViviTheMage
EXPENSE everything, seriously...if it's related to 'work' or your business, it's expansible.

This gets many into trouble...esp. in home-businesses.

If you don't have an actual OFFICE you go to (not home office) then you have to be really careful...same thing with a non-dedicated vehicle, computer, camera, phone, etc.

There is a lot to punch list...

Agreed. This is why a CPA's counsel is necessary.

 

[a123456]

I echo what everyone else is saying. Hire a CPA and get it done. I can't believe you're thinking about doing the actual filing based on ATOT advice. Think of it like insurance. You buy car insurance, no? Why? To protect against some small percentage chance that something bad happens and you get hit with a big bill. Same with corporate taxes. There's probably a higher chance that you screw something up or leave money on the table because you're not familiar with corporate tax law. After the first year and having gone through the process, then you can probably take the chance and do the next year yourself since it's pretty much going to stay the same for most of your forms except slightly different numbers.

By the way, you not only have to estimate the tax that you're going to pay each quarter (April, June, September, and January), you have to *pay the money* too to both federal and state. It doesn't have to be exact but you'll get hit (to the tune of 5-6%) if it's not enough. Most employees don't worry about this since it's done automatically via payroll tax but since you're self-employed, you have to take care of this yourself.

There are probably a bunch of extra things that you can deduct (or deduct them differently) that are related to your business like the mileage stuff mentioned above so that you can save money. Another example is that you're allowed to deduct 50% of your self-employment tax off your Federal return so that 5288$ would be a bit lower since it's off of a lower number than 43700. A good CPA will save you enough money for a novice business owner that they are worth the fee. After all, you did estimate having 17k leftover so you can afford it.

Again, do not do this yourself, at least the first time. Seriously. I can't stress this enough even though you probably won't listen anyway. *sigh* You seem to know just about nothing about taxes but maybe enough to get yourself in trouble so get a real pro to take you through it this first time.

 

[nanette1985]

You need a reliable, experienced, knowledgeable, honest accountant who knows about small business. First, to get you set up. He/she will tell you how to set up quickbooks (if that's what they use) so that when the quarter rolls around, all you have to do is send your files over. You have every penny of income and every bit of expense already in the system, properly categorized.

And the law changes constantly. Don't waste your time doing something you're not trained for. A good CPA will save you money in deductions, knowing about the latest info, and so on.

Get recommendations from people you know and respect. This is important.

Also, I don't see you mentioning sales tax, business disability, unemployment tax, the business portion of your income-FICA-etc.

And if you don't do it right from the start, the fees will destroy you.

PS you don't mention using a payroll system for your paychecks . . . getting that set up in quickbooks etc is worth everything your CPA charges.

 

[alkemyst]

You really don't need an accountant nor a CPA for this kind of undertaking if you can read and follow the instructions in many of the online and printed material.

I did my own taxes (self-employed + w2 + 1099's, along with a home, etc) for years and the one time I picked a pro he came up with about the same I did. Once I added in his fee I netted out a negative $200 on what I would have gotten.

The real trick is to one have a real business to start with and two write everything down in a ledgerbook/application of your choice. I really recommend a ledger as you can always have it with you...as a small business owner I may have been just out on the road getting groceries only to have a bit of business and related expenses (mileage, material, etc) pop up. It's easy to lose track of what was what.

 

[EagleKeeper]

Document every expense, date and reason ASAP. You can never keep to much paper (you can scan the receipts and label the images)

 

[EagleKeeper]

You should have started the LLC in Nevada to save fees and possibly CA income tax.

 

[a123456]

Originally posted by: alkemyst
You really don't need an accountant nor a CPA for this kind of undertaking if you can read and follow the instructions in many of the online and printed material.

True, if you're careful and know what you're doing and keep track of everything. The OP has been edited now but did you see his first attempt after going over the material? It was off by more than an order of magnitude of what would be a reasonable estimate on tax owed. Hence, the suggestion that he see someone who can guide him better than random hints from ATOT. If he was close and seemed to know what he was doing, then a CPA might not be as necessary.

To me, 200$ isn't that big a deal to make sure stuff is fine, especially for someone as inexperienced in finances as FBB. There's also the time-value of money. He might spend 20+ hours or more trying to deciphering IRS materials, which is clearly not his strong suit when he could be spending that time on more photography.

Is it overkill? Maybe. After a double check that stuff is on the right track and that nothing is really stupidly or obviously wrong, then sure the next 20+ years or whatever, you can do your own taxes.